Shanghai Composite inception was July 15th 1991. So the below 24-year price return is calculated from that day till today vs the S&P500. Dividends are currently around 2% for both indices. Trailing P/E is currently 18-19X for both, so this is a valid time to take a measurement.
RETURNS price return measured from July 1991 (24yr).
S&P500 - 7.37% CAGR, 5X money.
SSE Comp - 14.97% CAGR, 28X money.
VALUATIONS measured by the ratio of Total Market Cap to GDP (July 1991 to July 2015).
US starts at 62%, currently 125% (above mean).
CN starts at 90%, currently 82% (below mean).
Thus this measurement period is quite favorable for the US; the US market begins the period valued cheap,and ends the period signifiicantly above mean valuation, while CN ends the period significantly below mean valuation. And STILL the CN equities destroy US equities 28X vs 5X MOIC.
No games with numbers kids, CN has blown away US returns for 24 years. And if you think that is going to change now you’ve got a screw lose…see 7% CN GDP growth. US is slowing down, GDP growth is 2%, and the CAGR since the 2007 peak is only 4.25% (even with rates at zero and massive money printing).
Here’s 24 year data, against some other US benchmarks…
Shanghai price return from inception (July 15 1991 to July 15 2015)
[Name, Open, Close, Change]
Shanghai Comp : 133.14, 3805.70, 2758%
S&P500 : 380.28, 2107.40, 454%
Nasdaq Comp : 493.64, 5098.94, 933%
Russell 2000 : 170.04, 1264.52, 644%
There is a reason why they do not want to add this index to the global benchmarks…you investment management people are already underperforming. Can you imagine if they weighted in the second largest stock market on the planet, returning on average 15%+dividends?
Haha Shanghai has the lumpiest index chart I’ve ever seen. It doesn’t appear to be much of a long-term compounder. Just wait until risk is systematically underpriced in the equity universe and then buy on margin. I’m sure for a minute China was worth 2.5x more in mid-2015 than it was just one year earlier. That definitely seems reasonable.
Congrats if you made money. Not a viable investment strategy for institutional capital with a long time horizon imo. If you simply avoid blowing up and are in a reasonably good compounding strategy, you will do well over time.
But, but, look at returns on China, Biotech and the Nasdaq! I want more risk in my portfolio, not less. Up my risk, please, but still try to keep drawdown sub-15%.
I like taunting people with the facts, watch the rationalizations.
No way to “head-in-the-sand” this one guys; second largest equity market on the planet, including dividends almost Warren Buffet like returns (17% for 24 years), and it’s forecast to become the largest equity market in our lifetime…meanwhile the S&P will do like what, 6% forward.
makes a lot of sense actually. I think foreign investors might be at an information disadvantage in terms of hand picking stocks, but if you’re cool with standard beta, you’ve got nothing to lose with some ETFs.
A good ‘apples to apples’ comparison would be S&P500 vs CSI300 (largest caps in each country), but we have to settle for 10-yr returns. Yet again, CN beats, even when they crash to 8X forward P/E in 2014. Add UK and JP, same story.
CSI-300 since inception (April 8, 2005)
CSI-300 292%
S&P500 77%
NASDAQ 155%
FTSE 34%
NIKKEI225 74%
Chart (toggle the “zoom” buttons, it loads kinda buggy sometimes)
Shanghai stock exchange turns 25 years old today, beating every major index in the world hands down. A fact almost never reported by the West, except in this rare Bloomberg artcile…
“Twenty-five years to the day after the founding of the Shanghai Stock Exchange, the bourse’s benchmark index has delivered a 3,548 percent gain, excluding dividends. That compares with 348 percent for the MSCI Emerging Markets Index and 533 percent for the Standard & Poor’s 500 Index over the same period.”
In the news, here in Q3 2016 the Americans (MSCI) still have not added the China A-shares to their “global” indices. It has been two years since these became investable. Golly I wonder why the delay? Adding China would mean lazy investment managers everywhere would actually have to research this market, which is very different from other markets, and difficult to understand, “fuck boss, that sounds like work!”. The second reason is global politics, America is threated by China, so just don’t include their market in the index! The final reason is that this market has outperformed all markets for 25 years, right now all markets are up, but this market is down. If you put this in the index NOW, it’s going to massively outperform everything over the next long stretch. Which means everyone who avoids this market is going to look really really stupid. Unless you just don’t put it in the index, act like one of the biggest stock markets on the planet doesn’t exist…then the problem goes away. Then you can put China stocks in the index when they are UP, then when people don’t invest in them, say they “outperformed”.
Their endless list of “valid concerns” are irrelevant, because the market exists, and can be invested in. People (like me) are invested right now, but we have no valid benchmark, because all “global” benchmarks are wrong.
If you wisely choose not to invest, in a time when these issues end up burning those who did invest, then you truly outperformed.
This guy is smart. The obvious move as the US continues to fall apart and become more desperate; short overvalued S&P and long CSI300. Yet this trade makes delusional American heads explode, note the silly use of the word “unlikely”. China is winning, and they will likely keep winning, there is nothing unlikely about it.
And in his search for a haven from the turmoil he sees coming, Wu has lit on an unlikely target: China. Penjing’s $170 million pan-Asia fund of hedge funds will increase its allocation to China to as much as 35 percent from 20 percent, Wu said in an interview.
“China is a very unloved market for the rest of the world,” said Wu. “China is about 20 percent of the world’s market cap, but foreigners basically don’t own anything. That means everyone in the world is underexposed to China.”
If “you’re still trying to use the same strategy as the ’80s to jump start the economy, I am very skeptical,” he said. “The economy is already on steroids. If you are talking spending more to create growth and create jobs, I don’t think that’s feasible.”
^ I’m still holding, but I’m holding as a 40yr type of bet; where high GDP growth, efficiency gains, nice dividends, and massive corrections in P/E lead to S&P crushing returns. But it could go years with nothing, then suddenly 100% in a year, it’s a crazy market as well all know.
Like the guy said in the quote above “China is about 20 percent of the world’s market cap, but foreigners basically don’t own anything”, demand just isn’t there yet.
I just buy individual A-shares direct using Interactive Brokers, they now have both Shanghai and Shenzhen (including the wacky ChiNext board). But I also own some ASHR since it has options (they don’t actually have a CSI300 ETF trading in China that we foreigners are allowed to buy, and the derivatives market there is zero and/or we aren’t allowed in).
At least we have access now, but this crap needs a lot of development still…
